Compliance delivers unexpected benefits

Many business leaders may object to the stringent corporate regulations that have emerged in the past two years, but organisations that have deployed reporting tools to help them meet post-Enron regulatory requirements are increasingly finding that the systems also deliver unexpected business benefits.

While many firms initially deployed business intelligence (BI) reporting systems simply to provide an automated way of proving financial processes were in line with legal requirements, there is now awareness such systems can be used to help optimise those same processes.

John Taylor of business performance management (BPM) vendor Cartesis said the same corporate reporting regulations that many have accused of being too expensive to comply with have actually helped deliver improved corporate performance.

"Compliance has meant data collection and reporting has had to change and everyone's had to have the drains up and look at how they perform these processes," he said. "That has led to large investments in workflow, document management, BI and BPM technologies, but as firms have gained visibility and control over their processes they have flushed out a lot of inefficiencies."

Some IT departments have also found they can use BI technology deployed for compliance to offer the business new services, according to Lisa Dreyer of BI specialist Sybase. "We have customers who built reporting systems to meet regulatory demands and then found business benefits," she said. "For example, some of our banking clients developed risk analysis systems to comply with Basel II and discovered they can use the same tools to also do trend analysis."

David Eggleston, systems development manager at West Bromwich Building Society, agreed deploying effective BI systems can deliver multiple benefits. The company recently implemented BusinessObjects Dashboard Manager to track its key performance indicators (KPIs) and the system has since aided both regulatory compliance efforts and corporate decision making, according to Egglestone.

"Ensuring executives know the position of the business each day means they are can make quicker, better informed decisions," he said.

Meanwhile, visibility over KPIs such as the proportion of business and commercial customers has also given the company the ability to check it is in line with Financial Services Authority (FSA) regulations governing responsible lending, Egglestone said.

He further argued that the development of a data warehouse to underpin the dashboard has made compliance with future regulations easier. "We've found we have 90 percent of the data already in place in the data warehouse to build the required risk assessment models for Basel II."

Beyond these operational benefits some argue that using BI systems can also bolster share price performance. Speaking at this month's Gartner BI summit, electronics giant Philips former chief financial officer Jan Hommen said reporting results quickly demonstrated to shareholders that you have good control over operations. "It shows you respect your shareholders and there is a reward in the share price," he added.

And for those unconvinced by the benefits of compliance, the potential costs were again apparent this month as the Enron trial started. It is this legal threat that remains one of the main drivers for investment in BI systems, according to John Hagerty of analysts AMR Research. "There is growing awareness that there are huge reputational risks if you don't have adequate controls," he said.